Trying to refinance a multi family in rural area with no comps

3 Replies

We have a 7 unit commercial multi family located in West Enfield, ME. We own it free and clear and would like to cash out refinance it in order to purchase more properties.

We have tried on a few occasions only to be told that there are no other properties like it in the area making it impossible to determine the value. We have been told to try the local credit union that they may be able to help us. We will be applying to the local credit union next. Since recently discovering the bigger pockets forum, I wanted to share our situation to see if anyone has any other ideas

Commercial financing relies on commercial appraisals. Commercial appraisals do not emphasize comps.

I would think a local lender would be your best bet to secure financing.

In my experience credit unions are hit or miss since they don't generally provide commercial financing.

As for the valuation, leave that up to whatever lender shows interest. You will be required to get a commercial appraisal, like all commercial appraisers subject to USPAP or FIRREA, the appraiser will need to address the three approaches to value: cost, income and sales. If the appraiser does not believe one of the three approaches is applicable he/she will need to address in the report. As to whether commercial appraisals utilize "comps" don't be misled. Appraisers use "comps" for both the sales and income approach to value.

@Dan Wallace

Thanks Dan, yes it was awhile ago that we tried to refinance. But from what I remember The bank did order a commercial appraisal, and that’s where we hit the dead end because he could not establish value and he cited a lack of comps.

We have renewed our interest in refinancing and hope that it will be easier this time since we are both going local this time and banks are lending more easily than when we last tried. Fingers crossed